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Equal treatment for agency workers - are you prepared?

16 May 2011

Are you prepared?

The Agency Workers Regulations 2010 are due to come into force on 1 October this year. The time between the final regulations being published and coming into force is intended to give agencies and hirers enough time to familiarise themselves, budget and prepare for the significant changes to their regulatory framework - and they will need it.

Agencies and hirers will have new legal obligations, which, if not complied with, could carry a hefty price-tag. Although final guidance was published this month, there are still many unanswered questions, complex definitions to come to terms with, and ambiguity surrounding the exact obligations.

Key points of the regulations

Qualifying agency workers will have the right to receive equal treatment in respect of basic working and employment conditions with permanent employees in the same position. Where the agency worker is a unique hire and there is therefore no employee comparator, agency workers will be entitled to any terms in respect of relevant basic working and employment conditions which apply generally in the workplace.

Qualifying agency workers are those who have been in the same position for the same hirer as a permanent employee doing the same (or broadly equivalent role) for 12 calendar weeks, without taking more than a six week break at any time during that period. Agency workers may therefore qualify for protection under the regulations, even if they have been supplied by different agencies through different intermediaries, as long as they clock 12 weeks for the same end-user.

A minimum of six weeks absence or being assigned to a substantively different role with the hirer will count as a break in service. (Sickness absence for up to 28 weeks will not break service).

The regulations will not apply to the genuinely self-employed, those employed on a managed service contract (where the agency delivers an entire service for an end-user and will supervise and direct the workers itself), in house temporary staffing banks (i.e. those employed by the end-user on a casual basis) or on secondment arrangements. They will apply to agency workers contracted via an umbrella company (i.e. where the agency acts as an employer to agency workers who work under a fixed term contract assignment) or other intermediary.

Equal treatment includes:

  • basic pay and contractual payments (e.g. overtime and shift allowances)
  • bonuses or other incentive payments
  • rest and break periods
  • annual leave and contractual enhancements
  • minimum working time rights
  • improved protection for new and expectant mothers (such as adjustments to working conditions and hours)

It excludes:

  • occupational sick pay
  • pension
  • compensation for loss of office
  • maternity pay
  • redundancy and notice pay
  • expenses
  • financial participation schemes and most benefits in kind

But will hirers know which employee payments or benefits are included? For example, the guidance states that lunch and childcare vouchers are included, but what about staff discounts? What is included is not clear-cut and, no doubt, cautious hirers will look to offer agency workers such benefits if there is any doubt and bear the extra cost.

The regulations also contain some day one entitlements for agency workers such as the right to receive information about job vacancies, and the right to equal access to on-site facilities (such as child care and transport services) from the hirer. Responsibility for these rights lies with the hirer, not the agency.

What claims could agency workers bring?

Regulations 17 and 18 set out the numerous claims that an agency worker could bring in the employment tribunal for any contraventions of the regulations, some of which have no qualifying period.

There is nothing to stop companies dismissing agency workers before the 12 weeks are up, to avoid being subject to the regulations. However, if a company takes on the same temp three times for 11 weeks, with six week breaks in between each work period, this will be considered as illegal avoidance of the regulations. In these circumstances, the agency worker will be deemed to have completed the 12 weeks qualifying period and will therefore be entitled to equal treatment. It may also attract a fine of up to £5,000 on top of the loss of earnings and perks compensation the tribunal will award the agency worker.

Liability of agencies and hirers

Regulation 14 states that the agency and the hirer will be responsible for any breach of agency workers rights relating to their basic working and employment conditions, to the extent that it is responsible for the infringement.

But, how can responsibility be clearly allocated between the agency and the hirer? Regulation 14(3) provides a defence for the agency. The agency will not be liable where it can show that it:

  • took "reasonable steps" to obtain relevant information from the hirer about its basic working and employment conditions
  • on receipt of that information, it acted reasonably in setting the agency workers terms and ensuring that the worker received those terms

But how is an agency supposed to discharge their duty, other than obviously paying the agency worker the same as the hirers employees. What are reasonable steps? How can an agency ensure the worker receives those terms from the hirer, e.g. the same rest and break periods as employees? The guidance suggests that the agency will not be held liable where a hirer fails to deliver entitlements such as childcare vouchers or breaks that employees get as the agency has no influence or role in providing access to such entitlements.

When looking at whether the hirer is responsible, regard must be had to the steps it took to provide information to the agency worker.

The fact that agency workers can choose to bring a claim against both their agency and hirer from the outset is not meant to be an indication of joint and several liability but enables a tribunal to identify the degree to which any party in a "chain" of relationships is responsible for any infringement. How easy this will be in practice is not clear, and could lead to wide inconsistencies where it is unclear whether the agency or hirer is at fault.

At first glance it is hard to see how a hirer could be responsible if it has provided correct information to the agency and the agency informs the hirer it is complying with the regulations. But how will blame be apportioned where there is an alleged lack of adequate monitoring/failure to request all relevant information by the agency coupled with an alleged failure by the hirer to ensure equal treatment of agency workers terms other than pay?

Action for hirers and agencies to take

  • familiarise yourselves with the definition of equal treatment under the regulations
  • carry out risk assessments to analyse how many agency workers will fall within the scope of the regulations
  • get policies and administrative processes in place to reflect the requirements of the regulations
  • agencies should start gathering information from hirers on their basic working and employment conditions for all the categorised employees whose work puts them in the same position as the agency worker. which should ensure that agency workers are given equal treatment, and hirers should ensure this information is to hand
  • agencies should also put in place reminders so that they can check with the hirer if there have been any changes to terms and conditions and pay rates which affect agency workers.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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